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HUD Sweeping PRAC Residual Receipts Accounts

Housing providers that operate 202 units with Project Rent Assistance Contracts (PRAC) have been notified by Housing and Urban Development (HUD) that most balances of residual receipt accounts will be recouped and applied to offset future appropriations. Residual receipts are frequently used by providers to make improvements to aging properties.

HUD sent a memorandum to 202 and 811 operators with PRACs on June 19, which essentially sweeps residual receipt account balances above $250 per unit.  According to the June 19, memo, “HUD defines ‘Residual Receipts’ as Multifamily Housing project funds in excess of amounts needed for project operations, required reserves, and permitted distributions.”

The memo also indicated that exceptions may be granted. Projects that had intended to use residual receipts for improvements should be in contact with staff in the local field office as soon as possible.

Please contact me at LeadingAge New York if you believe that you are impacted by this new policy. Several members have expressed concern about this change, and we are in contact with impacted organizations in other states through our partners at LeadingAge in Washington. 

Contact: John Broderick, jbroderick@leadingageny.org, 518-867-8835.